One of Governor Scott Walker's oldest political allies and top donors, a rail executive whose firm recently got big bucks from the state, is indicted for making illegal campaign contributions to Walker.

April 12, 2011

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Wisconsin Governor Scott Walker claims the state is broke. That, he says, is why it is necessary to enact draconian anti-labor laws and to restructure state government to dramatically increase the governor’s power.

The governor, who today celebrates his 100th day in office, likes some trains. He likes some trains a lot. For instance, despite all of Walker’s claims about a fiscal crisis, the new governor’s administration has already found $14 million for the Wisconsin & Southern railroad corporation. The money, most of what was distributed from the state’s Freight Railroad Preservation Program (FRPP) grants, will be used to preserve and upgrade freight rail infrastructure.

“Despite the fact one of Walker’s first moves as governor-elect was to reject $810 million in federal funds to build a high-speed passenger rail system in the state as part of a proposed Midwestern rail initiative, the state’s relationship with Gardner has flourished,” notes a Madison newspaper account of ties between the state and Wisconsin & Southern. “According to published news accounts, the company stands to gain substantially from a possible deal with the state to buy 50 miles of track between Madison and Reedsburg, and another 20 miles of track in Madison. Under the deal, the state would take ownership of the tracks, and Wisconsin & Southern would operate them, making the company eligible for more FRPP grant money, including potentially between $35 million and $60 million to rebuild the Merrimac Rail Bridge.”

Gardner was so enthusiastic in his support of Walker that he promised in an email to the then-candidate: “I will do everything I can do to get you in the Governor’s Mansion.”

Gardner proved to be a man of his word. He raised tens of thousands for Walker. In addition to his own substantial contributions, his employees and family members coughed up a stack of checks for $5,000 each.

It now turns out that the money was given illegally.

Following an investigation that began last year—when a former female “friend” of Gardner contacted law-enforcement officials—the rail company president has agreed to plead guilty to two felony counts stemming from a money-laundering scheme Gardner initiated on Walker’s behalf, and Wisconsin & Southern has paid a civil forfeiture of $166,900. Under the plea deal, Gardner is expected to avoid jail time but serve two years probation. Additionally, seven Wisconsin & Southern employees will pay $250 fines.

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That’s the “single largest forfeiture ever paid to the Government Accountability Board (GAB) or to either of its predecessor agencies, the State Elections Board or the State Ethics Board,” says GAB director Kevin Kennedy.

How did the money-laundering scheme work?

According to the criminal complaint, Gardner’s own donations exceeded the state’s $10,000 limit for contributions to a gubernatorial candidate. And Gardner also asked employees to make $5,000 contributions to Walker’s campaign, he then reimbursed them himself and the employees with company money.

It is against the law in Wisconsin for a donor to make political contributions in another person’s name. It is, as well, against the law for corporations to make political contributions.

In the early stages of the investigation, the Walker campaign returned $44,800 to Gardner. That wasn’t the first time a Walker campaign has had to move money back to Gardner; when Walker was considering a 2006 gubernatorial run, his campaign had to return a $5,000 check that had been illegally given.

But this scandal is much more serious.

“The forfeiture reflects the size and scope of the money laundering scheme engineered by Mr. Gardner,” says the GAB’s Kennedy. “The railroad’s employees, while violating the law, had little choice after Mr. Gardner personally asked them to make the contributions with a promise of reimbursement.”

Yet, despite the scandal—indeed, despite the fact that the investigation goes back almost a year and that Walker’s campaign was forced to return almost $50,000 in illegal contributions to Gardner months ago—the governor and his aides keep making decisions that benefit his longtime, and very enthusiastic, donor.

Walker knows this does not look good.

He is now trying to deflect criticism by claiming that his decision to opposed high-speed rail should be seen as proof that he was not engaging in pay-to-play politics with Gardner. “If he wanted something, he would have gotten me to be supportive of Madison-to-Milwaukee (high-speed rail), and quite the opposite happened,” Walker told reporters Monday. “That was the time I was really revving it up in the opposite direction.”

Nice spin. But the fact is that Wisconsin & Southern has made out quite nicely since Walker began his term.

So, while it is often argued that Gardner’s company could have benefited from the federally funded high-speed rail project and related rail-transportation initiatives, the firm continues to enjoy plenty of love from the governor promised to “everything I can” to elect and from a supposedly broken state.

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